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Q.Pawan Ltd. was registered with an authorised capital of ₹ 10,00,000 divided into 1,00,000 equity shares of ₹ 10 each. The company offered to the public for subscription, 80,000 equity shares. The amount per share was payable as follows : On application – ₹ 3, On allotment – ₹ 2 On first call – ₹ 3 and On second and final call the balance The issue was fully subscribed and all amounts due were received except the first and final call money on 2,000 shares allotted to Chavi. Her shares were forfeited. Present the Share Capital in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013. Also prepare Notes to Accounts for the same.

CBSECBSE Class XII Board 2023Subjective· 4mImportance★★★★★
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Share Capital in the Balance Sheet = ₹7,90,000 — Subscribed and fully paid-up ₹7,80,000 (78,000 shares of ₹10) plus the Forfeited Shares Account balance of ₹10,000 (2,000 forfeited shares × ₹5 received). Because the forfeited shares are not reissued, this ₹10,000 is added to Share Capital, not transferred to Capital Reserve.

Concept: Share Forfeiture and Balance Sheet Presentation

When a shareholder defaults on a call, the company may forfeit the shares: Share Capital is debited with the called-up amount, the unpaid calls are cancelled, and the amount already received is retained in the Forfeited Shares Account.

The key presentation rule: the balance of the Forfeited Shares Account on shares that have not yet been reissued is shown under Share Capital in the Notes to Accounts, as an addition to the Subscribed Capital. It becomes Capital Reserve only after — and only to the extent of — reissue (the gain on the shares actually reissued). Here Chavi's 2,000 shares are forfeited but never reissued, so the whole ₹10,000 stays as an addition to Share Capital.

Solution

Step 1 – Chavi's position (per share)

Item₹ per share
Application (received)3
Allotment (received)2
First call (unpaid)3
Second & final call (unpaid)2
Called-up10

Amount received and retained on forfeiture = ₹5 × 2,000 = ₹10,000; amount unpaid (cancelled) = ₹5 × 2,000 = ₹10,000.

Step 2 – Forfeiture entry

ParticularsL.F.Debit (₹)Credit (₹)
Equity Share Capital A/c Dr.20,000
  To Equity Share First Call A/c6,000
  To Equity Share Second & Final Call A/c4,000
  To Forfeited Shares A/c10,000
(2,000 shares forfeited for non-payment of first and final calls)

Step 3 – Share Capital in the Balance Sheet

Called-up capital on 80,000 shares ₹8,00,000, less ₹20,000 (Share Capital debited on forfeiture) = ₹7,80,000 on 78,000 fully-paid shares. To this is added the Forfeited Shares Account balance of ₹10,000, since those shares are not reissued.

Balance Sheet of Pawan Ltd. (Extract) as at ______

I. EQUITY AND LIABILITIES

| Particulars | Note No. | Amount (₹) |

|---|---|---| …

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